Fixed Income Commentary

This report examines the JGB yield curve's 2s10s spread, noting that while inflation expectations might suggest a shift toward flattening, concerns over government influence on BoJ policy may delay a trend reversal. Analysts advise against rushing into flattener trades until the policy path post-June meeting is clearer.

Key Takeaways

• 1.The JGB yield curve is at a crossroads between a steepener and a flattener, with the outcome highly dependent on the Bank of Japan's stance on rate hikes.
• 2.Market concerns regarding potential government influence on BoJ policy decisions may delay a trend reversal in the 2s10s yield spread.
• 3.Analysts see no immediate need to rush into flattener trades, suggesting it is safer to wait for market trends to be confirmed following the June meeting.

Table of Contents

• Fixed Income Commentary
• Appendix A

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